An agreement was finally reached between the Canada Revenue Agency and the Public Service Alliance of Canada concerning the taxation of compensation paid for failures in the Phoenix pay system.
The large pan-Canadian union of civil servants had been fighting for a long time to ensure that this compensation paid to workers who were victims of Phoenix was not considered taxable.
The agreement that was reached in 2020 with the federal government provided for the payment of an amount of up to $2,500 for damages suffered by workers due to Phoenix’s failures.
The agreement that was finally reached between the PSAC and the Canada Revenue Agency, based on a typical case, stipulates that the portion of the amount paid for stress and damages up to $1,500 is not taxable.
This is “a victory for all PSAC members affected by the Phoenix fiasco,” commented the Alliance.
Because of the failures of the Phoenix pay system, thousands of workers found themselves without pay for a period of time, or overpaid or underpaid.
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